MJTT: 03/01/2009 - 04/01/2009

Showing newest 19 of 22 posts from 03/01/2009 - 04/01/2009. Show older posts

Oil Crunch, Shorts Punch, Financial Sector Out to Lunch...

Written by Zachary A. Musso On 3/30/2009 08:52:00 PM 0 comments

$SPX 60 Day, 60 Minute

The only thing I will say about today is that the breakdowns that occurred across the board in the financial sector have put a serious damper on the March rally. If you are holding financial sector tickers for the long haul, try to take as much profit as you can from them tomorrow morning. Let's take a look at some key technicals that took place within the financial sector names in my Weekly Watch List during today's trading session:

BAC is nearing its Support #2 ($5.65) outlined from last night's chart. BAC broke down from its Ascending Triangle formation, showing a considerable amount of price weakness. The only issue with this breakdown is the lack of volume accumulation or distribution, and until one or the other occurs, BAC will continue to follow whatever the overall market does. A large amount of volume distribution is needed in order for the March Rally to be illegitimate.
GS is close to forming a Head and Shoulders around the $105-$106 price level. Watch for a price pop tomorrow morning, and the $105-$106 level to hold. If this occurs, we'll need to see a large amount of volume distribution to confirm this possible technical formation.
UYG wasted absolutely no time breaking down below the Wedge of Death this morning and throughout today's trading session. The 200-Day SMA and Support #2 ($2.25), which were seen/outlined in last night's chart, are key technical indicators in determining price targets/potential swing reversals in UYG. Volume, like the other financial names, is lagging.
XLF was removed from my watch list and replaced by SKF. I am looking to get into SKF around $100-$105 if there is a morning market pop tomorrow. In my opinion, this range would be an ideal long-term snag if you want to get short financials.
Watch FAZ Resistance #1 ($28.31) VERY closely. If the market is persistent in going back to total bearishness before rallying again, I wouldn't doubt that we see our first test on this resistance level by Wednesday.

All in all, the financial sector looks very weak, and before the leveraged iETFs get too expensive and you are caught chasing them, I'd begin to build short positions if you haven't already. One problem with this strategy is the lack of volume distribution OR accumulation within the financial sector. This shows that the financial sector is still somewhat mixed about its current price trend, so watch for volume breakouts across the financial sector.

My positions are developing nicely, and boy, did it take them long enough. FAZ is still lagging, but SRS and TZA rocked today. SRS and TZA are both sitting on their 50-Day SMAs, as well as having overhead resistance at levels that both tickers tested today. SRS' price-to-volume divergence is currently strengthening the iETF's price gains, while TZA is being driven by the small cap destruction across the board today. With that in mind, TNA is developing into a nice swing trade off of Support #1 ($15.36) if the ETF gets beaten down all the way to this level. Again, volume is key in determining whether the ETF will push higher or bounce off of its new Resistance #1 ($16.96).

With the financial sector out of the way, Oil is something I would love to dip buy in the near future. Because of this, I will sit on the sidelines in the "shorting oil" process and wait for ERX to reach $22.00 and DXO to reach $2.56, both of which are Support #1's. Watch the Crude price to drop to $42-$45 before getting involved, especially if the overall market trend becomes extremely bearish again. If U.S. Exports are low on the Crude Report at 10:30am Wednesday, I'd be keeping a very close eye on oil names.

Tomorrow's Mental Reminders:

Financial Sector Price-to-Volume relationship
The VIX is on the verge of breaking out or dropping back into the low 40's, possibly setting up a small bullish flag within the $SPX, $DJI, and $COMPX alike.

And with that, I leave you with a couple of chart repeats that were mentioned above, as well as a sneak peak to tomorrow's post that will be dedicated to the weekly Economic Data. Enjoy your evening, and good luck to all tomorrow:

FAZ 20 Day, 30 Minute

SRS 30 Day, 60 Minute

TNA 30 Day, 60 Minute

VIX 20 Day, 30 Minute

Consumer Confidence Statistics (Courtesy of Econoday)

ISM Manufacturing Index Statistics (Courtesy of Econoday)

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The Week Ahead: Financial Sector Say What??

Written by Zachary A. Musso On 3/29/2009 10:37:00 PM 0 comments

Good Evening bloggers! I hope all had a nice and relaxing weekend, patiently waiting for the most important economic data week of 2009 since it began. Although March brought us pain off the bat, March ended up turning around for the better, eating away at the global market's losses and pushing higher off of what I have named the, "Profitability Rally." Many have said we've hit bottom, or that a bottom is in place. With the vigor of this rally we have on our hands, I happen to believe this statement to be true, with the simple addition of saying that 666 will most likely be tested before summer arrives. It could be this week, it could be at the end of April; all I know is that I am quite certain that we will see this bottom again.

My thought process that delineated the title of this rally to be the "Profitability Rally" is based upon how the rally started: Vikram Pandit said CitiGroup was most definitely making profits during Q1 of 2009. After this announcement, Ken Lewis said that Bank of America didn't need anymore government funding, and after that announcement, Mr. Dimon of JP Morgan said, "Hell! We're profitable too!" Just like that, the market went through the roof, and the world was saved. Not to mention, we've have 21 bank failures in 2009, two corporate credit unions get seized by the government, GM's lackluster CEO getting the government boot, and who could forget the billions upon billions of debt we've pumped into our system. Looks like I'm going to go buy crazy because shit, this rally is just beginning!!! Right?

MOST DEFINITELY INCORRECT.

The Financial Sector Downturn Theory, developed in mid-December of 2008 and made into a law at the beginning of January, holds firm at this stage in the game. At that time, I had only the balance sheets to back me up. Now, I have many solid long term technicals for big financial sector stocks and ETFs, and the first thing I'm going to post tonight are the charts I was asked to draw up. So, without further a-do, The Chartology of the Financial Sector:

BAC 60 Day, 60 Minute

XLF 60 Day, 60 Minute

UYG 60 Day, 60 Minute

FAS 60 Day, 60 Minute

As seen in the charts above, the four tickers outlined (BAC, XLF, UYG, FAS) have been developing two technical patterns that will determine the chaotic nature of the financial sector. The first technical pattern that is seen is the ascending triangle with a strong resistance (BAC, XLF). This pattern is normally a pattern seen before a breakout, but I've been on the receiving end of ascending triangle breakdowns (DRYS being my last) and with enough volume, the pattern can self-destruct in a matter of minutes. If there is a breakdown below the trend lines that BAC and XLF have held, then the first price supports to look towards are Support 2 ($5.65) and Support 1 ($8.09), respectively.

The next technical pattern that was seen in the four charts above was what I like to call the, "Wedge of Death." In an positively trending market, the wedge can be used to a traders advantage, saying that the equity of choice is in the midst of a consolidation and is due for a breakout. In this case, however, UYG and FAS are in deep trouble. As seen on the UYG chart, either the two ETFs will consolidate and push higher or will break below the bottom trend line and into the abyss of bearish support levels. UYG's support level outside of the W.O.D. is Support 2 ($2.25), while FAS' support level outside of the W.O.D. is Support 1 ($4.90).

My short strategy is finally blossoming, and my TZA/SRS trades don't look too bad at all. Real Estate is in for it in April, as the government will no doubt attempt to tighten the reigns a little tighter on the housing markets. Their mortgage rate fiddling, however helpful they say it may be, sets the housing markets up to be one of the many socialistic contributions the Prez will likely make in his first term.

In other news, Econ. Data is going to be a big market factor this week. The week itself will be very difficult to trade, but with ISM stats on Wednesday, Unemployment Rate on Friday, and other fun things throughout the week, April will surely start off with a bang. My take on the ISM stats have not been put into play yet, for I haven't had much time to rip the statistics apart. As of now, I feel that if the ISM Index shows a significant increase from February, I wouldn't mind getting long a couple of industrial names as an investment AFTER a market pullback. I will blog on this tomorrow night.

As for now, I leave you with my Weekly Watch List and a Good Luck from MJTT:

GS
BAC
NAL
UYG
XLF
FAS
FAZ
SRS
TNA
TZA
DXO
ERX
PCX
DUG
GLD
UYM
STLD
AAPL
ENER
QID

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Six Market Factors for Tomorrow

Written by Zachary A. Musso On 3/26/2009 10:55:00 PM 0 comments

I'm taking the night off. You should too! Go take a break and relax! Watch shitty, mindless T.V., like American Idol, Larry King Live, or something equivalent.

Six Factors to watch for during tomorrow's trading session:

A market pullback to Fibo 50%
A market breakout OVER Fibo 61.8%
Consumer Sentiment @ 9:55am
FAZ holding its $18.41 support
VIX support at 39
Heavy volume distribution beating out Monday's accumulation.

My chart set-ups haven't changed, so if you need to refresh your memory on TZA, SRS, FAZ, UYM, TNA strategies, feel free to check out last night's post. Otherwise, good night and see you bright and early in the morning!

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Snapback Day!

Written by Zachary A. Musso On 3/25/2009 11:57:00 PM 0 comments

The textbook "snapback" occurred today, where as the markets tanked for a small period of time and then snapped back into positive territory. I was not home to catch long trades, but trust me, if I were home, I would have been purchasing UYM and TNA to the utmost extreme while exiting my TZA position for around a 3+ gain. I will have to wait, once again, for a proper entry point for TNA and UYM. If the $SPX holds key resistance levels (818.61, 834.10, 838.01), we may be doing one of two things:

Setting up for a "rounded top," which was a theory I heard earlier today.
Constantly retesting the $SPX on considerable strength and preparing for a breakout above these levels.

Take a look for yourself:

$SPX 60 Day, 60 Minute

I created charts on my three short positions (TZA, SRS, and FAZ) as well as the two long, swing positions I've been concentrating on (UYM, TNA). Below each chart are annotations about the chart and the ticker:

TZA 20 Day, 30 Minute

Bottom Support in @ $49.32. Watch descending price channel in relation to TZA's volume accumulation. Watch even more closely for TZA consolidation/sideways trading between the Bottom Support and Resistance #1 ($55.32).

SRS 30 Day, 60 Minute

Bottom Support in @ $48.95. Today's short lived buy spike stayed within the bounds of the negative trend line that started back on March 6. This push off of the trend line allowed SRS to pull back to Support #1 ($53.26). Watch for volume accumulation, preferably in the way of a price-to-volume convergence relation. If this occurs and holds the Bottom Support, keep your eye on an SRS breakout.

FAZ 20 Day, 30 Minute

Bottom Support in @ $18.41. Major volume convergence with price spike over the past several days with a large amount of volume accumulation during today's trading session. Watch for a breakout in the near-term that could continue if $SPX levels begin to diminish.

TNA 30 Day, 60 Minute

Resistance #1 ($18.84) is very strong. Watch for a rounding top pattern (as discussed above) OR a breakout above Resistance #1 with an appropriate volume accumulation. In my opinion, if there is a lot of volume over the next couple of days, you'll probably see a strong distribution. Resistance #1 is very important at this stage in the rally for TNA!!

UYM 30 Day, 60 Minute

As for UYM, Support #1 ($12.16) is very strong. On the contrary, the retests to this support level indicates a possible move lower. Look to the following if the price doesn't show anything:

Volume Accumulation
Price-to-Volume (whether the action shows price convergence or divergence)
Positive trend line breakdown

Other names to watch tomorrow are GLD and STLD. STLD is nearing its $9.16 resistance, which sets it up for a either a healthy pullback candidate or a breakout candidate. If GLD picks up a lot momentum on a down $SPX day tomorrow, be in for a wild rest of the week as that move should indicate to traders that people are beginning to take a side on the market. As of now, the market is "sideless," not sure as to where the direction of the market may go. Tomorrow is an important technical day for the markets to surpass.

Keep your heads on a swivel.

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$SPX Update

Written by Zachary A. Musso On 3/24/2009 10:28:00 PM 0 comments

Need sleep, so this is all you have tonight. Many apologies. Enjoy:

$SPX 60 Day, 60 Minute

My shorts did decently today on a low volume pullback. To be quite honest, if that was a corrective movement, that was what I was looking for the get into UYM and TNA. I did not, however, like the prices of these ETFs today, thus I did not buy into them. Instead, I dipped into TZA at $52.03. A tiny position it is, I'm now getting my timing correct while preparing for a total market sell off. Don't think you're out of the woods: it'll be around the corner before you know it.

The Market Trading Grid hasn't really shown me much, other than the direction of the inverses which I can play accordingly in order to trade regular names. The winner of $UVOL vs. $DVOL was $DVOL, 5 to 1 in comparison to $UVOL. As I said above, the volume wasn't the greatest, and today may very well have been a corrective movement.

My targets right now include the following:

TNA @ $15.63 with a break below Support #1 (from the chart last night) and the 50 SMA.
UYM @ $12.16 with a restest of Support #1 and a possible push off of the upward trend line.
PCX around $3.60 off of a double top price pattern and a light distribution within its volume.
ERX to hold its 50 SMA. Watch for a volume indication as to where the price is going with ERX!!

Other than that, I have nothing more to tell you. If I wanted to, I could tell you about how dangerous the PPIP is, but I'd rather leave that to the idiots calling the market bottom. Talk it up morons, show us your muscles, and go make your clients 10% of the 70% you lost them.

Sleep well to all.

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If You Can't Beat Them, Join Them...

Written by Zachary A. Musso On 3/23/2009 09:29:00 PM 0 comments

... At least for the time being. If you're wondering, yes, I'm still holding FAZ. In fact, I pulled the trigger on long SRS today at $60.67. Do I like this rally? Sure, who the hell doesn't? The mere fact of me believing it, however, is quite different. I have named this post accordingly, for I am sick of watching my gains become nonexistant. I'm waiting for prices in TNA and UYM to correct for a day (hopefully tomorrow) so I can get into them for the very short term. The only problem I see with this strategy is the fact that if FAS double tops at either the closing price of today or the $7.75 resistance it set up last Thursday, we might see a financial market backlash like we saw Thursday and Friday of last week. Play the rumor milling trash pit, and realize that if you're oober long and you stocked up after $SPX 750, you're not out of the woods yet.

Tonight, I've developed a new theory that deals with a very basic mathematical strategy to the problems we currently face. It's simply the ratio equation of [a/b = c/d]. I decided to see how directly proportionate this rally is compared to the one we experienced in November, both for the $SPX and FAZ. Oddly enough, the results were quite interesting:

http://docs.google.com/Doc?id=d7crcjd_3gpwh6ccf

As odd as this next fact may seem, if we're going with the same time spread as the November rally, we're due in for a pullback of a large scale within the next three days. I figure this not only because of the current near-term overbought stage and the fact that the government can only prop our market up for so long, but because the November 21 to December 8 rally was 17 days long. Simple math shows us that 17 days tacked onto the starting point of this rally (March 9) gives us an approximate date of March 26 to begin a substantial pullback. That theory has a VERY low probability of occurring, but if it did, that would be pretty cool.

Again looking at mathematics, it's possible that FAZ has averaged in a bottom for the time being, closing at $19.20 at the end of the trading session today. As glorious as that may be for my cronies holding FAZ with me and suffering major losses, it also gives me and others time to analyze how long this bull run will last.

Thus, charts for UYM and TNA:

UYM 30 Day, 60 Minute

TNA 30 Day, 60 Minute

If either have a pullback, don't just watch the support and resistance levels. Ask yourself:

Where are the moving averages? (50 SMA, preferably)
Where will the trend line lead the ticker price wise if there is a pullback?
What are the current VIX, $TRIN, $UVOL, and $DVOL levels?
How is the market reacting to the sector in which I am currently looking at? (In this case, Basic Materials)

Besides TNA and UYM, tomorrow I will also be looking at FSLR, STLD, PCX, and ERX. Until tomorrow night, enjoy your spoils from today (if you weren't like me and got hit in the face with a polished leather boot).

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Watch List for the Week of 3-23-09 to 3-27-09

Written by Zachary A. Musso On 3/22/2009 11:48:00 PM 0 comments

Sadly, I had some things that came first in my life tonight, thus no charts. The bolded tickers are the ones that I will be hawking big time this week. Enjoy!

HAL
BHI
PCX
STLD
FSLR
JPM
GLD
AAPL
GT
QID
KIM (iBC Pick from the one and only Mr. Fly)
NAL
EBS
TNA
UYM
DXO
ERX
DUG
FAZ - $37.17 (averaged from two positions) @ 39% exposure
FAS - $5.25 @ 19% exposure

As you can see, I have my UYM trade prepared, as well as an expected swing trade in TNA if the market pulls back. I've preached it before and I'll preach it again: SMALL CAPS AND TECH TICKERS ARE THE FIRST TO GO IN MARKET DECLINES. Also check out EBS; if the Healthcare/Biotech sectors begin to rally, I like this name as a long-term hold.

For now, I need sleep. I will be on TweetDeck from 6:50am til about 7:10am tomorrow if you have a question about the watch list!

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Looking Ahead to this Week (In Brief)

Written by Zachary A. Musso On 3/20/2009 07:07:00 PM 0 comments

Just when the bulls thought they were out, the bears pulled them back in. My FAZ positions paid off in spades over the past two days, and I wish I would have bought more in the $20 range. My position in it isn't profitable yet, but it is soon to be with the after hours breaking news announcement in regards to regulators seizing control of U.S. Central and WesCorp. How interesting that regulators are deliberately taking over the largest corporate credit unions that have a combined asset total of $57 billion. The MarketWatch updater has one regulator paraphrased, saying that these corporate names don't serve the consumer and that a "stress test" tipped them off that there was a large amount of risk involved in these two corporations.

With that said, I thought it would be a smart idea to take on a tiny position in FAS around 3:10pm, holding it over the weekend in order to hedge my rather large FAZ position going into next week. It seems as though the opportunity to short the market is now, however, especially with CEO Ken Lewis now joining partner in crime Vikram Pandit and all of AIG in their anger towards the taxation of bonuses. This debacle is the catalyst the market has been searching for, and I feel you're about to see FAZ and other inverse names go through the roof. Next week should be quite ugly.

On the contrary, if the market sells off, is it due to news or was their a fundamental screw up that shanked the market? In my opinion, the term "systemic risk" comes to mind, all because of the companies that screwed the U.S. over along the path of recessive market behavior. Sadly, the market may not recover until we see that ugly 666 bottom rear its head. Another opinion of mine lies within the Basic Materials sector push. With weak GLD holders/swing traders getting shaken out from Thursday and Friday, the gold industry may be a safe bet in times of financial sector demise:

GLD 6 Month, Daily

The second GLD scenario played out pretty well, and it all occurred in one day. The push from about $87.50 all the way the that $93ish close was pure craziness. I wish I was home to catch this earlier in the week, but I sadly was not. I was on my phone all day checking out the movement, and I was shocked when I caught a 10 minute glimpse of the ticker action without charts. The next move in GLD will probably be a pullback, especially with the incredible volume accumulation on the 18th. I have been looking for this volume accumulation for what seems like years now, and with that huge amount of volume, I see at the very least sideways consolidation. Watch GLD closely this week, for the action within this ticker during the back end of this past week has shown the general public that people still fear the financial sector.

Along with the financial sector, I'm also concentrating on the energy and basic materials sector (as always). I have a strong feeling that they will continue to pullback as the market consolidates here, and if we have another push higher off of $SPX 752-743, we'll probably see energy names be the largest gainers. This would have to mean that the $SPX breaks down from a wedge that has formed from a descending trend line dating back to January 6th and an ascending trend line that formed on March 13th. As interesting as this wedge is, there are other scenarios to watch for in the $SPX that we as traders can base our trades off of:

$SPX 30D 60M

The $SPX chart looks a little cramped, but if you pay attention to all of the different things on the chart, this week will be absolutely nuts. I'm looking forward to banking some serious coin this week after losing my toosh Monday, Tuesday, and Wednesday, gaining half of what I lost back on Thursday and Friday.

Going back to the basic materials and energy sector discussion for a second, I will be posting my watch list later today with some noteworthy chartology for some of the tickers within these sectors that I will be watching very, very closely. Stay tuned, and until then, I hope all of you have enjoyed your weekend!

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Pre-Market Trading Grid

Written by Zachary A. Musso On 3/20/2009 08:45:00 AM 1 comments

Things you need to be looking at today through my Market Trading Grid:

Market Trading Grid - VIX (5D10M), $TRIN (20D30M)

The $TRIN broke out of its March 2nd down trending line. This gives shorts the advantage today, for they currently have the momentum. If the shorts do die out due to options expiration day, watch for the $TRIN to drop back a little. A strong support level to watch for the $TRN is 0.25, which it's bottomed off three to four times in the past.

The VIX is in an uptrend after yesterday, but with the volume not being strong enough yesterday for most shorts into the close, I'm not convinced until the VIX breaks above that 44.59 level.

Keep your head on straight, today will be crazy.

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Welcome Back!

Written by Zachary A. Musso On 3/18/2009 11:41:00 AM 1 comments

$SPX 6-Month, Daily

And I'm also getting slaughtered in the market. Why? Well, on my somewhat-kinda vacation, I decided to hop on my laptop. Much to my chagrin, I bought FAZ last Friday. There was no true vacation, and there won't be until I can get out of my shorts. It will come soon, I pray you, for this rally is just another hoax. If you've been following me on Twitter, I've been slopping together a ton of TwitPics, allowing myself to be fully absorbed in the market over my "vacation." Bad move on my part.

Stuff happens. You win trades, you lose trades, and trust me, I've been losing lately. My March gains are gone (for now) and my February gains are being challenged. Do I mind though? The answer is no. I don't mind because my conviction on this market is completely correct. Our government is not doing things the capitalist way, and the market skyrockets. Interestingly enough, GLD was selling off in the morning today like none other... But, just as the Fed comes on TV and announces their plan to buy U.S. debt, GLD goes nuts and goes on a +6pt. rampage. Just the thing I've been waiting for in order to plot my revenge on Mother Market. In other words, I got my enormous buy volume accumulation today from GLD, which is a piece to the sucky rally puzzle.

This rally is a joke, and although I said I'd buy into it (and I did via UYM, TNA, and swing trades in FAS), I have no interest in going bull right now (not even in the littlest bit). In fact, I added to my FAZ position today at $33.85 to average my position price at $37.16. I am underwater and pot-committed TO THE BONE in FAZ right now, and I could care less. When this rally implodes the market and FAZ is back to its amounts of $60 and $70, I will greatly appreciate the wrath of the bear market.

Just because C, JPM, WFC, and all the other schmucks say they're "profitable" and Ben Bernanke says they're "solvent" doesn't mean they really are. Our government is not as stupid as they appear to be folks. They saw what happened at the beginning of this market tank when they played the doom and gloom game, and now they're playing their citizens, the ones that they are supposed to be representing, like XBox360. They are Louisville, and we are Moreland State.

It doesn't matter what you think right now. Everyone is right. I am right, you are right, and I know a lot of the people I talk to on twitter (shout out to @mikailov @fortune8 @kunal00 @hawaiitrader @WeeklyTA @UrbaneGorilla) are right as well. We all have our own theories, and they're all right at some point in time. The "at some point in time" part is obviously very important. Timing is EVERYTHING in this market. If you don't believe me, read The Fly's "Best Thing That Could Have Ever Happened to Me: Part 2" at iBC. It's all about how perfect his timing was. Although my patience on this FAZ trade lagged, you must realize that getting into iETFs soon is not only important, but smart. Take your spoils from your bull run before your bull gets castrated.

Another thing to contemplate. This is the absolute inverse of what happened from Feb. 10th to March 9th, too quick too soon being the only difference from then to now. You see, not only are we rallying with a V-Bottom, we are also getting ridiculously overbought... Almost as ridiculous as how oversold we were when push came to shove a week or so ago. So, was it right of me to hang onto FAZ @ $40.48 when it went below $35? Probably not. We are entering a near-term era of overbought, and when it ends, the market will go back to its routine of bad news, false profits, government screw-ups, and some left over lagging Econ. Data. In my opinion, I still find it hard to believe that many people feel that the fundies on the financial sector are patched up and good as new... It seems as though February helped them oh so much!

This was my welcoming back post. I've done a lot of reading, and most importantly, a lot of relaxing (even if I was trading as well). I am trying something new, and if it works out, I will disclose to all of you what I did and why I did it. Otherwise, I'm back. Stay tuned for charts tomorrow.

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Still on Vaca, Don't Get Any Ideas...

Written by Zachary A. Musso On 3/15/2009 10:49:00 PM 1 comments

Just posting the MJTT Weekly Watch List:

GLD
X
UYM
FCX
XLB
DXO
SLB
ESV
RIMM
FAS
FAZ
GS
STLD
SLX
PAAS
ABX
JPM
PGX (interesting pick if I do say so myself)
REW
ERX

See ya'll Wednesday!

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Bring On the Vaca...

Written by Zachary A. Musso On 3/12/2009 09:23:00 PM 1 comments

Although I sold out WAY too early (aka around 10:30am/11:00am), I relieved myself of holding TNA and UYM, selling UYM @ $9.50 and TNA @ $13.00. I witnessed a pullback in the market around this time, and because of the morning we experienced, I decided that it may be best to set up stops around 10:45am this morning (thus the trashy sell points). All in all, I snagged a 5.5% gain in TNA and a percentage gain not worth talking about in UYM. The reality of the situation is that I gained money and ended the week close to where I began.

In other words, I'm on vacation until next Tuesday! I won't be posting here, but I will be downloading charts through TwitPics and tweeting it up on Twitter. Look for me there, because I will be there everyday during this time of rest that I need big time. I hope everyone enjoys their Friday, weekend, and the beginning of the third week of March. Sadly, I'm not on a full-out vacation, for I am still doing financial work and market outlook for a couple of people I work with.

Adios amigos, enjoy your market adventures.

UPDATE: Watch FAZ for a support bounce around $38 for true confirmation of this rally!

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My Respite.

Written by Zachary A. Musso On 3/11/2009 09:48:00 PM 1 comments

Allow me to exhume to you my week of worrisome anguish over my attempts at getting into FAZ at the "right time." My first mistake was attempting to get into it at a "right time," for as a trader, I should know that one of the basic concepts of trading is that there is NO perfect entry or exit point. First, I made a good entry and exit on Monday, catching the entry right off of the positive VIX transition and the exit right at the negative VIX reversal. I had been going well for a whole week now on my shorts and longs, hitting UYM, USO, GLD, and now FAZ. Being on top of the world, I attempted to outsmart the market yesterday by getting into FAZ around $69. At this point, the VIX had just reversed, and I felt confident that I was on to something. My confidence was quickly side swiped, as I got completely caught off guard during this trade, misreading it completely and having to take a loss. My exit was just above $65.

This upset me a lot, and today, I decided to do something absolutely absurd. Around 2pm, I began my VIX Quest, attempting to outsmart the market yet again. Today, my odds were better, as the volume was a fraction of what it was from yesterday's rally. I entered my FAZ position late, waiting for a rather large VIX breakout to go above the last 5 minute sell candle. The minute the sucker crossed, I fired off my trade, buying at $59. Then I sat and waited. The VIX spiked a quick point, but FAZ went dead weight. Instead of dropping the dead weight and concluding that this VIX spike was somewhat out of the ordinary, I decided to hang out for dear life and ride this one out. Bad idea, as my exit was slightly above $56.

At this point in the day, I felt as if I had been utterly defeated. "How am I losing money in this market? What am I doing wrong?" And then it hit me.

I WAS TRADING LIKE A FOOL.

Yes, you heard it straight from the horse's mouth. Over the past two days during this market rally, I have been questioning this market. I had an 8% gain on the month after Monday, and now I have been slimmed down to around 6%. A 2% loss when the market goes bonkers 6% is absolutely ridiculously. This upset me, and because of this irrational move, my emotions said, "Screw off technicals, I'm grabbing this bull by the horns."

And here I sit:

TNA @ $12.32, 28% exposed
UYM @ $9.48, 28% exposed
Cash, 44% exposed

What do I do now? The market struggled to hold on to an after 3pm gain, and this is normally a bad sign. The VIX spiked from 42.80 at 3:40pm to 43.53 at the close. The $UVOL to $DVOL ratio went from 2.73 to 1 all the way to 1.49 to 1 in the last 15 minutes of the trading day. And I'm stuck bullish because my head got ahead of me. My inexperience over this past week has been quite evident in too many ways.

Because of this, I am taking a 3-Day break period after I close out my TNA and UYM positions. I am also re-posting my trading rules below:

Trade accordingly to what you've lost in the past months: Enjoy your spoils, but look long-term. When you get a trade right, take your profits. When you get a trade wrong, don't wait for it to turn around; just take your profits.

You're not always going to be right: Don't be ridiculous. Look at how poorly Warren Buffet is doing right now, and use him as a perfect example of how even the best lose too. Read #1 in order to learn how to deal with that.

Watch your technicals closely: Take all emotion out of your trades; if the stock/ETF/iETF is at a strong resistance or support, sell it or buy it (respectively). Don't be greedy and try to wait for the stock/ETF/iETF to bottom out or push higher.

Pick a strategy that works all the time: But I thought you just said that you lose sometimes? You do, but that doesn't mean your strategy doesn't work 24/7. Trade with what works with you and your goals of trading (hopefully it's to bank some serious coin) and set up indicators that work with your goals. If you need to, run fake money with it first to make sure it's flawless.

When you need days off, take them: It won't kill you to do that. If the market goes up, then damn, you missed a day. The market finds an equilibrium, so if it's up on a four-day stint, don't buy in to snag a couple of easy money makers because you will lose. Instead, wait for the beginning of a downtrend and play the bear card. If you don't like the bear card, then wait for the pullback and then the new uptrend.

Profit correctly: What's that mean, "profit correctly"? It means when you make a profit, don't reinvest right away. There's something called opportunity loss in the economic world, and what it means is that when you lose money, you're not just losing a green piece of paper but something more important; a vacation, an enjoyable dinner with your family, a trip to the jewelry store for a deserving wife, or a renovation on the house. Hence, I shall reiterate not to reinvest right away but instead analyze what you could use your profits for instead.

Enjoy trading: It's tough to enjoy the market when it seems as though you suck at trading; the reality of it is you don't suck, but instead, you struggle. Enjoying your trading allows you to relax, doesn't pressure you into trading off of emotion and stupidity, and it also allows you to win.

Winning is Good: Self-explanatory.

Enjoy the re-post, for these rules are pretty good. Another thing I am going to do during my 3-Day respite is take a new approach on the market: read up on rules, regulations, laws, and of course, trading strategies and other trading guides. Education is ALWAYS a plus and NEVER hurts!

I will also be working with my RSI-FS%K Trading Guidance System, and I will be re-evaluating the MJTT Trading Set-Up I posted back in February. For now, follow those rules above, for they'll help you learn to become a better trader.

Good Night from MJTT.

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Rally or Schmally?

Written by Zachary A. Musso On 3/10/2009 07:06:00 PM 3 comments

For those of you who don't know, the $SPX (S&P 500) was up 6.37%, the $DJI (Dow Jones) 5.80%, and the $COMPX (NASDAQ) 7.07%. The tech rally was the most notable today, as proven by the ridiculous NASDAQ surge. My weekly watch list was quite gorgeous, with the average percentage gain of 5.26% and an average dollar gain (not factoring in the FAZ loss) of $1.86. Most notable losers in the watch list are as follows:

FAZ: -$37.67, -37.9%
NEM: -$2.76, -7.3%

Most notable gainers in the watch list are as follows:

FAS: +$1.03, +38.1%
NUE: +$4.99, +15.8%
GS: +$11.33, +15.3%

I ended up in front of my computer around 1, and saw what was going down. I initially thought to myself, wow, this is incredible, and then I began to investigate what caused it. Through my research, it seemed as though Barney Frank actually did something good for the American public and the United States Stock Market, as he and his cronies on Capital Hill are in discussion about, "Heavily revising the Mark-to-Market accounting system and possibly reinstating the Up-Tick Rule back into our markets." Yet another man of power spoke up today, as Vikram Pandit of Citi told everyone that this quarter is the best he's seen for Citi since 2007.

Although I've heard rumors after hours of a "bottom sinking in," I must tell you that this pop we had today will be erased by the middle of NEXT week (not this week). I have no thoughts that the bears are going away, and to tell you the truth, I feel that today was a "buy the news" day. Another theory I have about today was the thought of traders being sick of oversold levels. We got to a point where oversold didn't matter, and that was when FAZ broke through its $85 resistance level on March 4 and kept going, not stopping until $115 was met. Traders have finally snapped out of it, and they've realized if they keep selling, the market will tank to unheard, unseen, and unbelievable levels.

So now we're stuck. We're going to rally some more, but when will we stop? Only time will tell. Allow me to grace you with bullet points of my mistakes today:

I didn't have market buy orders in for AAPL and GS off the open because I wasn't sure how the market would play out today (and I knew I would be away for most of the day, leaving me exposed without stop points if the market turned on me). Sadly, I have no idea that Capital Hill would rain godly words down upon the market to make it spring board an average of
Selling out of UYM @ $9.25. I took a gain, but it's not smart. This is the largest gain in the $SPX since November, so why I didn't hang on I have no idea. This is a classic case of, "Beginner's Trigger-Finger Syndrome," or BTFS for short.
I bought FAZ @ $69.43, only to receive a bitched-up loss of -$3.46, stopping out at $65.97. This was a mistake on my part, for the VIX wasn't too good of an indicator today and even at my sell-point, the sucker reversed for a massive up-tick. The $TRIN didn't work either, as it increased from 11:45am on. I even pulled out my $UVOL/$DVOL relationship today at my time of trading, but didn't time those right. This trade was a failure no doubt a 15 yard, failure to advance penalty on the offense, as the Quarterback (myself) screwed up big time.
GLD and USO have gone dead weight, and therefore I have a market order sell for GLD tomorrow and a USO stop @ $27.60, taking on a +$0.21 gain if I get stopped out. Should have sold off the open yesterday.

All in all, the beginning of this week has definitely shanked me. I have learned the bear market too well, all because I began trading in a bear market. Each time I've screwed up in the past, it's because I've been bullish, and I've made some good trading rules that I've followed when I want to go bullish. It's now time for me to make rules for the bearish game, as I clearly don't have any risk management for my bearishness. My mistakes will be added on to my "It's February" post rules, which will be edited and re-posted tomorrow night.

Until then, keep your longs that you had tomorrow until you see volume weakness. Watch the $SPX closely, for it's nearing a resistance level, as seen in the chart below:

$SPX 30 Day, 60 Minute

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The "Hmm" Day...

Written by Zachary A. Musso On 3/09/2009 10:16:00 PM 0 comments

As I thought going into today, the market was awkward and mixed. I'm not sure traders have digested what eliminating Mark-to-Market accounting will do for the overall status of the financial sector, and while "Dr. J's" thoughts about this topic are still lingering in the minds of many a trader, the market goes on the decline for the most part during today's trading session. With that said, we did end lower, but in all honesty, I feel we're going to go sideways this week. Heads up for swing trades this week, as I caught FAZ this afternoon @ $96.49 and sold out of it @ $98.51 for a +2 pt. gain. It was a good way to balance out the negativity in my portfolio, as I stuck with USO and GLD for my longs. Another thing I did to my portfolio was add another 5 % to my UYM stake @ $8.20 instead of dropping it, for I am quite confident about the basic materials sector in the future (especially closer to the end of this week).

I've decided that I'm going to be trading in and out of FAS and FAZ this week, but more into FAS than FAZ which is different than what I have done in the past (it's normally the other way around, if you didn't catch my drift). I like FAS this week not because it's ridiculously oversold, not because FAZ is closing in on a possible double-top resistance level at $114.73, but because I'm going to buy the bullshit rumor of Mark-to-Market when the buy volume becomes bigger, as well as in heavier quantities and without the intrusion of matching sell volume amounts that make FAS do what it did today:

FAS 5 Day, 10 Minute

Other charts of notability from the watch list after today:

X 10 Day, 15 Minute

*** Reiteration of last night's chart, only because the continuation of X's downtrend was seen today ***

XTO 30 Day, 60 Minute

*** Reiteration of last night's chart as well, only due to its stagnant nature and lack of going anywhere. Possible long-term volume increase based on the current volume pattern seen ***

AAPL 10 Day, 15 Minute

*** Special thanks to Mikailov for picking up that Tech was another notable sector last week. Let's keep AAPL close by for a possible long-term position as it nears a double-bottom support level ***

UYM 10 Day, 15 Minute

GS 10 Day, 15 Minute

Keep your head on straight. This market is straight up wack!

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The Chartology of Energy and Basic Materials: Part Dos

Written by Zachary A. Musso On 3/08/2009 06:59:00 PM 1 comments

Hope everyone enjoyed their weekend! Tomorrow should show us how the rest of the week will play out and whether or not the market will buy the possible oust of Mark-to-Market Accounting. Whether they will or not, I have noticed that the basic materials and energy sectors are the up-and-coming "bad boys" of the market that many want to get into. As the market declined last week, many of the basic material and energy sectors' industries were increasing. Check the 5-Day Industry Scan, courtesy of Prophet.net:

As for my picks this week, I am very confident that my USO position will be hitting at least $30.00 and my GLD position may even go to $95.00. I will probably end up relieving myself of the stresses of holding my large position in UYM by getting rid of it tomorrow (unless it pushes through its $8.52 resistance, then I'll hold for a little bit to see what will happen).

On to the charts for my basic materials/energy sector watches for this week:

GLD 1-Year Daily

UYM 10 Day, 15 Minute

X 10 Day, 15 Minute

NUE 20 Day, 30 Minute

USO 30 Day, 60 Minute

PCX 10 Day, 15 Minute

XTO 30 Day, 60 Minute

BTU 30 Day, 60 Minute

My watchlist for this week looks as follows:

GLD
NUE
X
UYM
FCX
XLB
NEM
USO
PCX
XTO
BTU
SLB
ESV
DXO
AAPL
RIMM
FAS
FAZ
GS

Another long list, but depending on what will happen this week, some tickers will probably be removed. Watch for a possible "First 30 Minutes" spike tomorrow, with the rest of the day staying up and down. I'm not sure how the market is going to react to the Mark-to-Market, but trust me, it will be the talk of the town for the whole week up until Thursday (meaning the market may stay mixed up until when a decision is made). There is no Economic News set to come out tomorrow, so tomorrow will be a trader's dream day based on price movements and volume amounts. All in all, it's going to be a very interesting week!

Good Luck and Good Night from MJTT!

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Holdings Update

Written by Zachary A. Musso On 3/07/2009 01:01:00 AM 2 comments

For all of you who are up in the wee hours of this fine Saturday morning, I thought I'd post what I did this week, recapping my action and how I'm up 4% to kick off March. Enjoy!

http://spreadsheets.google.com/pub?key=peX30LFa4TaQkfNcJiV0fMg

This link will lead you to my exact trades: entries, exits, the whole works. Next post will be Energy and Basic Materials Sector: Part II and will be posted on Sunday. This post will also include my weekend homework: the weekly watchlist and what stocks/ETFs/iETFs may be in for a beating or a pop next week.

Enjoy your weekend!

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How to Use Three Market Indicators with Acuity

Written by Zachary A. Musso On 3/05/2009 10:13:00 PM 0 comments

It's about that time again to write an educational post that explains something that I do when I trade in order to "one up" the market. Tonight's focus will be on three market indicators and the deadly trading pair I'm sure we're all familiar with: FAS and FAZ. If you haven't noticed already, I'm a fan of this particular ETF/iETF pair because they are normally easy to track. When FAS is going up, keep your eye on FAZ in order to catch the swing from long to short, bull to bear. Simple, right?

Wrong.

With today's sporadic, volatile, and inconsistent market, patterns can change at any given time and at any given rate. You may feel like you can't keep mistiming your exits and missing your entry points, and you might also feel like you can't trade during this trading atmosphere. If you run into problems and feelings like these during your trading, it may be time to master the market indicators.

We all know about the VIX and the "one up"-age that it brings to a trader, and although I use this market indicator as well, I'm going to concentrate on broadening your trading horizons with these three different market indicators that fellow traders sometimes pass over. These indicators I'm talking about are $TRIN, $UVOL, and $DVOL.

Almost all of us are familiar with $UVOL and $DVOL, for they give us the Advances/Declines in the total volume for the trading session. When I sit down to trade, I bring up the $UVOL and $DVOL and view their charts on an Intraday, 5 Minute set up that is used to easily delineate the possible candle patterns that may be occurring during the day. In order to visualize this a little easier, $UVOL and $DVOL are outlined in their intraday charts from today down below:

$UVOL Intraday, 5 Minute

$DVOL Intraday, 5 Minute

Within $DVOL's chart, there are 5 opportunities for bulls to get in a jab or two on the bears. From these opportunities, 3 out of the 5 are prevalent on $UVOL's chart; one at 11:30am, another at 1:05pm, and the last at 2:30pm. 3 of 5 isn't too bad, considering that 60% of the times you could have taken advantage of tiny bullish movements were rather large in relation to today's volume: 34,143 in an average volume gain for those 3 opportunities on $UVOL, which equates to about 28% of the total up-volume amount at the close (120,939).

Although these market indicators are good to look at when you want to check the overall position of the market, how do these market indicators tell me when to buy and when to sell? Intraday charts of FAS and FAZ will answer this question for you:

FAS Intraday, 5 Minute

FAZ Intraday, 5 Minute

Through the pinpointing of the $UVOL/$DVOL action, we can now pinpoint the time of day that FAS will make a push higher and FAZ will make a push lower. This trick is normally used for short-term stock/ETF/iETF tracking, and in order to make an accurate volume-based buy or sell throughout a regular trading day, you will want to also concentrate on price-to-volume convergence and divergence patterns on a longer time basis (10 days, 20 days, etc.).

The final market indicator that normally gets bypassed is $TRIN. I rarely hear traders discuss the action in $TRIN, but the action is very, very important. $TRIN is the NYSE's Short-Term trade index, and for the most part, it tracks who is shorting the market and who isn't. When $TRIN increases, the market is moving in a bearish direction. When $TRIN decreases, the market is moving in a bullish direction. An intraday chart of this market indicator is provided in the chart below:

$TRIN Intraday, 5 Minute

Based upon the principles of using $UVOL and $DVOL in order to pinpoint entry and exit times for FAS and FAZ, $TRIN allows you to witness another market indication of entry and exit points. With the confirmation from $UVOL, $DVOL, and $TRIN, FAS and FAZ can be easily tracked through choppy markets and make you a good bit of coin if you can be patient and observant. Don't get trigger-finger syndrome; sweat it out and read your patterns correctly!

Good Night from MJTT!

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GLD and the Gold Commodity

Written by Zachary A. Musso On 3/04/2009 09:24:00 PM 1 comments

Before I begin, I have found a couple of noteworthy articles that are must-reads:

http://www.cnbc.com/id/29510983 - New Mortgage Plan (Outlined): VAGUE and the FNM/FRE Mortgage thing is just atrocious... Housing Bubble #2, Housing Bubble #2...
http://www.cnbc.com/id/29515552 - Moody's May Cut WFC, JPM Ratings: Food for thought going into tomorrow. If this were to occur and a higher-than-expected initial claims report were to come out tomorrow, this may be what keeps us lower.
http://www.cnbc.com/id/29510966 - Jon Najarian's Mark-to-Market Theory: 100%? Come on now...

Let's get down to business. Through my recent research on attempting to find a legit commodity that I can keep my hands on for a while, I decided to research Gold again, with my method of purchasing it through GLD. Right off the bat, I must tell you that looking at GLD on a 5, 10, or even a 20 day chart on some occasions is difficult to do due to its lack of movement from a day-to-day perspective. GLD is an obvious long-term hold, as it makes sense due to the long and tedious movements up or down in the actual Gold commodity. As of today's close, Gold has dropped $100.70 from its high of $1007.60 set back on February 20th. Since that point, the Gold commodity has been on a linear track of negativity, as seen in the /YG (Mini Gold Futures):

/YG 3-Month Daily

On a 3-Month scale, the Gold and Silver industry has been one of the best performing industries, gaining 25% during this time span. Not only is this remarkable, but to hit $1000 per ounce of Gold is also an incredible feat to accomplish. The draw for Gold, however, may be lightened up for the time being. Gold became a focus of mine not only from my Basic Materials and Energy rant from last night, but because as I watched CNBC on Monday, the talking heads began discussing the future of the popular commodity. "It's because traders want to take their gains from their Gold spoils and direct the cash towards somewhere else," Dennis Kneale proclaimed. The panel agreed, but I had a funny gut feeling about this statement. "Where in God's name would you put your cash, with exception to iETFs and the traditional paper bag that lies underneath your bed at night?" I racked my brain for quite some time, and because of this, I decided to take a look at my long-term projection chart of GLD:

GLD 1 Year Daily

GLD has been taken to the slaughterhouse since the Gold high on the 20th. The minute the 23rd rolled around, not only did Gold and GLD begin to drop, the market began to play wish-wash. I did not trade last week because of these indicators, for as GLD sold off and the market became indecisive, it seemed as though the market wanted to go higher but couldn't get the $UVOL to back it up. The 26th was the day the market made up its mind, and the market took a downturn all the way to 692.30 at the $SPX's lowest. GLD broke down below its first trend line on February 24th (the trend line started back on January 15th) and is nearing its long-term trend line first charted on November 13th. The price level to push off of this long-term trend line will probably end up being somewhere around $88, and with the current price-volume decline, I am waiting for a pivot point in the volume to give GLD some strength. Today, we experienced an explosion in most sectors in the U.S. markets, as well as a late day push in the financial sector that lasted longer than the normal financial sector push. In the midst of all of this, however, GLD still stayed below 90 and continued its downturn, closing at $88.99 with /YG currently trading in a range of $910 - $912. My support level for the Gold commodity is $895.90, while my support for GLD lies at $86.57. If the Gold industry pushes off of these levels, I wouldn't doubt that you see a short-term $50 move in Gold and a quick $3.00+ move in GLD.

I fear that this rally we have on our hands right now is a dangerous one, as well as a foolish one to stay with for too long a period of time. I am a commodity believer at the moment (hence all of the energy and basic materials names from last night), and I especially like the movement I'm witnessing in Oil. For what it's worth, however, I do NOT feel we've put in a bottom to this market. All in all, I expect a slight pullback tomorrow off of the open (a continuation from the late day shorting opportunities which brutalized the market and robbed the $SPX of about 12 pts. and the $DJI of about 100 pts.) with a mid-day rally, followed by an indecisive and unpredictable close. I am nervous for the outcome of our indices throughout the rest of this week, thus I will sit on the sidelines with my 20% position in USO and my 80% position in cash, unless I see something worthwhile that I can hold overnight or intraday and gain profit from.

In other words, sit on the Gold commodity until further notice. Gold has flown under the radar, and because of this, its pivot point will be very subtle and tough to read. Be patient and observant, as well as being diligent about watching the price-volume pivot point indication. For now, I leave you with a Good Luck and a Good Night from MJTT!

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MJTT

Developing Technical Analysis Skills One Candlestick at a Time Since December of 2008

Oil Crunch, Shorts Punch, Financial Sector Out to Lunch...

The Week Ahead: Financial Sector Say What??

Six Market Factors for Tomorrow

Snapback Day!

$SPX Update

If You Can't Beat Them, Join Them...

Watch List for the Week of 3-23-09 to 3-27-09

Looking Ahead to this Week (In Brief)

Pre-Market Trading Grid

Welcome Back!

Still on Vaca, Don't Get Any Ideas...

Bring On the Vaca...

My Respite.

Rally or Schmally?

The "Hmm" Day...

The Chartology of Energy and Basic Materials: Part Dos

Holdings Update

How to Use Three Market Indicators with Acuity

GLD and the Gold Commodity

Trader Bio

Loyal Readers

Vote for MJTT

Twitter Updates

MJTT on Facebook

MJTT Archives

Noteworthy Financial Information Sites/Blogs

Daily Market Contributer

GO Stats

FINZ.tv Addict

StockTwits Contributer

Developing Technical Analysis Skills One Candlestick at a Time Since December of 2008

MJTT Disclaimer

Trader Bio

Loyal Readers

Vote for MJTT

Twitter Updates

MJTT on Facebook

MJTT Archives

Noteworthy Financial Information Sites/Blogs

Daily Market Contributer

GO Stats

FINZ.tv Addict

StockTwits Contributer